Title
Aurora Tambunting vs. Court of Appeals
Case
G.R. No. L-48278
Decision Date
Nov 8, 1988
A 1967 foreclosure sale was declared void due to non-compliance with statutory notice requirements, and the mortgagors were granted an accounting of rentals received by the mortgagee during the case.
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Case Digest (G.R. No. L-48278)

Facts:

1. Loan and Mortgage Agreement:

  • On 16 December 1959, private respondents, spouses Damaso R. Cruz and Monica Andres (the Cruzes), obtained a loan of P3,600.00 from petitioners, spouses Antonio and Aurora Tambunting (the Tambuntings), who operated a lending-pawnshop business under the name "Agencia de Tambunting."
  • The loan was secured by a Deed of Real Estate Mortgage over a parcel of land owned by the Cruzes, covered by Transfer Certificate of Title No. 59433.

2. Default and Foreclosure Proceedings:

  • The Cruzes failed to pay the loan upon maturity. On 17 March 1967, the Tambuntings filed a petition for extrajudicial foreclosure of the mortgage.
  • A notice of sheriff's sale was published in the Rizal Chronicle on 12, 19, and 26 July 1967, with the auction scheduled for 2 August 1967.

3. Legal Action by the Cruzes:

  • On 2 August 1967, the Cruzes filed a case for annulment of the mortgage and damages, seeking a writ of preliminary injunction to stop the foreclosure sale. The court issued a temporary restraining order, halting the sale.
  • After the restraining order was lifted, the sale was rescheduled to 20 October 1967, with re-publication of the notice. However, the sale was again postponed due to a motion for reconsideration filed by the Cruzes.

4. Final Foreclosure Sale:

  • On 26 January 1968, the property was sold at public auction to the Tambuntings for P9,400.00, despite the Cruzes' objections regarding non-compliance with notice requirements.
  • Aurora Tambunting later consolidated the title in her name and transferred the property to Tambunting Realty Corporation.

5. Trial Court Decision:

  • On 2 September 1974, the Court of First Instance of Rizal ruled that the mortgage and promissory note were valid but declared the foreclosure sale null and void due to non-compliance with legal requirements. The court ordered the Cruzes to pay the Tambuntings the loan amount plus interest and attorney's fees.

6. Appeal to the Court of Appeals:

  • The Court of Appeals affirmed the trial court's decision, ruling that the foreclosure sale was invalid due to non-compliance with the posting and publication requirements under Act No. 3135, as amended by Act No. 4118.
  • The appellate court also granted the Cruzes' petition for an accounting of rentals received by the Tambuntings during the pendency of the case.

Issue:

  1. Validity of the Foreclosure Sale:

    • Whether the foreclosure sale on 26 January 1968 was valid despite alleged non-compliance with the posting and publication requirements under Act No. 3135.
  2. Accounting of Fruits and Application of Rentals:

    • Whether the Court of Appeals erred in granting the Cruzes' petition for an accounting of rentals received by the Tambuntings during the pendency of the case.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Conclusion:

The Supreme Court denied the petition and affirmed the decision and resolution of the Court of Appeals. The foreclosure sale was declared null and void due to non-compliance with statutory requirements, and the Cruzes were entitled to an accounting of the rentals received by the Tambuntings during the pendency of the case.


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